What Fox’s Time Warner bid means for you

Time Warner confirmed Wednesday that it recently fended off an unsolicited bid from 21st Century Fox. But media experts say consolidation within the television and movie industry will likely increase, and the gold rush for lucrative live sporting events will become more competitive.

21st Century Fox Inc.’s
FOXA, -1.23%
bid for Time Warner Inc.
TWX, -1.01%
valued the latter at $80 billion or $85 a share, according to reports. 21st Century Fox confirmed it made an offer, but said the two companies are not in talks. Time Warner said the bid involved swapping each of its shares for 1.531 nonvoting Fox shares and $32.42 in cash, but flagged “significant” uncertainty around the valuation of Fox’s non-voting stock. “There are considerable strategic, operational, and regulatory risks to executing a combination with Twenty-First Century Fox,” the company said in a statement. (In 2013, News Corp.
NWS, -1.06%
, which owns The Wall Street Journal and MarketWatch, spun off Fox.)

More movies, television shows and live sporting events being produced by one company means less competition and more seller power, says Samuel Craig, director of the Entertainment Media and Technology Program at New York University’s Stern School of Business. “Consumers may see a slight increase in their cable bill to see the content they want,” he says. As media reports of the bid have suggested, it’s unlikely that the Federal Communications Commission would allow one company to own both CNN and Fox News, he adds. “That would be an easy property for Rupert Murdoch to sell,” Craig adds. “It’s pretty dramatic how Fox News’s growth has outpaced that of CNN.”

While most Americans still fork out for cable, fewer people are going to the movies. The number of tickets sold fell 1.5% to 1.34 billion in 2013, according to the Motion Picture Association of America. Fox could bring some new perspective here, Craig says. “The opportunity here is to do a better job developing all the properties they have with DC Comics,” he says. “Fox may do a better job with the DC Comics.” Time Warner hasn’t had the same financial success with DC Comics that Disney has had with Marvel, according to data from BoxOfficeMojo.com. Disney has its own studio, Marvel Studios, devoted to the X-Men and Spider-Man franchises. DC Comics’s biggest superheroes include Batman, Superman and Wonder Woman.

As consolidation continues, sports fans may also have fewer cable operators that show their live events, says Charles Warner, a media consultant and part-time professor at The New School for Public Engagement. “Live sports events are really important,” he says. Last May, FOX Sports won the U.S. English-language rights for the World Cup in Russia (2018) and Qatar (2022) beating offers from both ESPN and NBC. When people TIVO and DVR programs, they fast-forward through the advertisements, but that’s not possible if they want to watch a live sporting event. “Advertisers will pay more for live events,” Warner adds.

Any deal would have to pass the Department of Justice’s antitrust review, which would depend heavily on how it defines each entertainment and news market, says Michael Hodel, equity strategist at Morningstar. “The FCC review is defined by the public interest,” he says. “All the FCC would have to do is conclude that the deal is not in the public interest to reject it.” That said, since the mid-1990s, “there’s been very little regulation over the scope of properties a media conglomerate can own in the U.S.,” says Aram Sinnreich, media professor at Rutgers University. The European Union takes a more hands-on approach to regulation of the amount of properties one media company may own, he adds.

Media analysts are divided over the impact of such consolidation.

“I would bet that most consumers don’t know that Comcast owns NBC,” says Dan Rayburn, a principal analyst with Frost & Sullivan. “And why should they? As long as good shows get made and they get to watch the shows they want, the average consumer could care less who owns that broadcast station.”

But Patricia Aufderheide, communications professor at American University in Washington, D.C., disagrees: “Anyone who needs information to act in the world, which would be all of us, should be concerned about concentration of ownership and control.”

And while some stiff antitrust hurdles remain, the biggest of all is that Time Warner rebuffed advances. But, Craig adds, “Rupert Murdoch is not one to give up.”

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.